In 2024, climate tech exhibited signs of maturity despite the slight decline in its venture investment, which totaled $12.9 billion, a modest 7% down from the previous year, as indicated in a recent PitchBook report. The sector’s round size significantly increased. Investors notably gravitated towards companies that had successfully transitioned from seed round allocation.
Historically, substantial investment has been directed towards nascent companies within the climate tech industry. This trend resulted from its relative novelty and the bountiful early-stage prospects born out of a strategic shift towards new markets and technologies following clean tech’s crash in conjunction with the 2007 Great Recession.
However, as these startups matured, they started commanding larger, later-stage deals with considerably higher valuations. According to data from PitchBook, the median deal size in 2024 was $7 million, a million dollar increase from 2023. The median pre-money valuations also experienced unprecedented growth, jumping to $44.5 million, a figure significantly higher than the $31.5 million recorded in the previous year.
Simultaneously, several emerging startups are encountering difficulties raising capital amid a more stringent investment environment that necessitates robust unit economics. Conversely, those demonstrating considerable operational success are being awarded more substantial deals.
Original source: Read the full article on TechCrunch
